Canadian Contractor

Mike Draper   

If you're still on the tools yourself, you're losing money

Canadian Contractor Business

If you are still doing all the construction yourself in your business, that's fine. But understand that you will quickly reach a maximum annual earnings, and it will never really grow. You will be maxed out.

“Every time I take the tools out of my truck, I’m losing money.”

A contractor said that to me recently – and I completed agreed with him.

When he has to take the tools out of his truck and he has to go back on the tools himself – perhaps he’s down a worker – he’s costing himself too much money. He’s doing $30 an hour work and he’s missing out on the big picture.

If he’s on the tools when he should be going out and closing the sale on a new project – like a nice, clean $40,000 renovation with a decent bottom line – he’s costing himself a lot of money. Doing the work, rather than managing the work, is hurting his business.

Does every contractor have to stay off the tools, you ask? Well, it depends what type of contractor you want to be. If you want to be a tradesperson, a one man show, you can be on the tools and run the business, too. But understand that your business will be limited in size and scope and you will quickly max out on your annual earnings.

If you want to really build a firm, a business, you will quickly find out that you are much better off getting some labour help at $30 to $40 an hour to do the construction, while you turn to actually running your business.

This is the whole concept of Opportunity Cost. The cost of doing something yourself in business – rather than delegating it, or subbing it out, or hiring someone to do it – is the things that you don’t get to do yourself because you are now “too busy.” Like signing up lots of new, profitable work. Can’t do that if you are still on the tools.

 

 

 

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